The invoice price of a vehicle can help you negotiate a better price with your dealer. This is because it will show the dealer that you have an idea of how much profit they will be making when they sell you the car with the price tag they have. In some cases, this move can be very advantageous especially when you are buying a car for the first time. Remember salespeople in dealerships know how to read people. They will know if you are a first time buyer or someone with experience. If you are a first time buyer and you have information on the invoice price, it will help prevent the salesperson from taking advantage of you.
What is invoice pricing?
Invoice price can be described as the price appearing on the invoice the manufacturer the dealer when the dealer has received a car from the manufacturer. It is sometimes referred to as ‘dealer cost’. Note that sometimes this price may ta time be higher than the amount the dealer will actually end up paying the manufacturer. This may be a result of discounts the dealer is offered and do not appear on the invoice. Dealer cash incentives and dealer holdback are two good examples of such discounts. There are others based on factors like dealer’s sales volume for a certain month.
Remember the price on the invoice does not reflect any benefits from the manufacturer to the consumer, the destination charge or the registration, advertising, licensing, title or tax fees. Sometimes the figure quoted as invoice price will include the destination price.
In the end, knowing a dealer’s actual invoice price is hard even for seasoned automotive insiders. This is why there are systems developed such as the True Market Value (TMV) pricing system. It is a platform used to confirm what other buyers are paying for the vehicle. TMV accounts for the effect of the extra charges of the manufacturer as well as the hidden subsidies of the dealer.
Invoice price discrepancies
Invoice prices on sites such as TMV always match the price you find in booklets prepared by the vehicle manufacturer and sent to dealers as the ‘dealer order guide’. All the same, a person may add some items such as advertising fees. Note that when you are making comparisons on invoice prices it is important ensure the vehicle’s options and styles are an exact match. For instance, the cost of a Ford Fusion Sport AWD may be slightly more than a Ford Fusion Sport FWD.
Region pricing differences may also be the cause of a discrepancy. In the Southeast and South, large independent distributors control pricing of Toyota cars. They may set prices that are different than those established by the manufacturer for the rest of the country. At the same time, in the Northeast an independent company distributes Subaru vehicles. It can influence the pricing of Subaru in the region. This means knowing the invoice price of a vehicle may need you to do research based on this information.